DFS bags Mumbai airport shops deal

MIAL terminates earlier duty-free contract with ITDC/Aldeasa

MUMBAI: Soon, on your way to Paris or London, you will be able to buy some of the world’s leading luxury brands at the Mumbai airport.

Mumbai International Airport Ltd (MIAL) has awarded the duty-free retail contract to DFS Group Ltd after revoking an earlier contract awarded to an ITDC/Aldeasa combine.

In fact, travellers at the international terminal have already been greeted by banners announcing the arrival of luxury retail. DFS Group is part of LVMH, the international group that owns brands like Moet & Chandon, Louis Vuitton, Fendi and Christian Dior, and will start operating in Mumbai from January 2008.

Earlier this year, MIAL had floated a global tender under which a joint venture of ITDC and Spanish firm Aldeasa was selected the duty-free operators with a bid amount of Rs 571 crore. But due to issues like a delay in forming the JV as also an attempt by ITDC/Aldeasa to renegotiate the terms of the contract, MIAL decided to terminate the contract and award it to DFS Group, the second highest bidder. Reportedly, the ITDC / Aldeasa combine felt that it had bid too high to make any significant business sense.

The new contract with DFS Group entails the payment of a minimum guarantee to MIAL of Rs 250 crore for three years over and above revenue sharing. Sources said duty-free activities in Mumbai airport accounted for revenues of Rs 45 crore last year.

Located in the international Terminal 2C, the new duty-free shopping area will be spread across 24,541 sq ft. Of this, 14,585 sq. ft will be at the departure level, 8395 sq ft at the arrival level and 1560 sq ft will be for storage.

An executive with MIAL told DNA Money: “The two main revenue-generating items for duty-free shops the world over are liquor and tobacco. We expect the same to be true of Mumbai. There will also be shops selling clothing, cosmetics, perfumes and electronic goods as also various other boutiques.”

Duty-free shops are retail outlets that do not apply local or national taxes and duties and are usually found in international airports, sea ports or passenger ships. These shops work on the basis that most countries do not levy taxes on goods to be exported.  Internationally, they form a source of significant profits for airport operators.